MANILA, Philippines – Universal Entertainment Corp, the company Japanese tycoon Kazuo Okada owns, will proceed with its US$2-billion casino-entertainment project in Manila despite questions over whether it violated the Philippines’ anti-dummy law.
A day after the Department of Justice (DOJ) recommended the filing of charges against Okada, 24 other individuals and 10 corporations, Universal said in a July 16 statement that it will proceed with its Manila Bay Resorts project set to open in 2015.
“We will continue to develop our dream of a fully integrated resort in Manila Bay that will not only create 15,000 stable jobs for the country…[and] attract international recognition and guests from all over the world,” Universal said in a statement carried by Reuters.
It stressed that it followed the Philippine law when it decided in 2008 to invest in Manila, but changes in the interpretation of foreign ownership in later years prompted them to seek Filipino partners.
The DOJ investigating panel found that Japanese firm Universal Entertainment was effectively funding and managing the 3 “dummy” companies that bought the land where Manila Bay Resorts will be located.
The Philippine Constitution bars foreigners from owning over 40% of a land or the company that owns the land.
Based on legal advice
Universal Entertainment recounted that it first considered joining the ambitious Entertainment City project in 2007. The state gaming firm Philippine Gaming Corp (Pagcor), which is developing the reclaimed land in Pasay City, wanted to put the Philippines in the gambling map through Entertainment City.
“Being a foreign company, we were not yet familiar with Philippine government laws and ordinances so we sought out legal counsel to guide our planning and development from the largest and most prominent law firm in the Philippines,” Universal Entertainment said, referring to SyCip Salazar Hernandez & Gatmaitan law firm.
“In 2008, as per Philippine law, land was acquired in Manila Bay based on the advice of our legal counsel,” it added.
Several lawyers from the SyCip law firm were among the 16 Filipinos included in DOJ’s findings, which were based on Pagcor’s award of the project to the Okada group in 2009.
SyCip law firm managing partner Rafael Morales stressed in a July 15 statement that its lawyers “have, at all times, acted in full compliance with all laws applicable to the transactions in which they were involved. Those transactions were legitimate and lawful and we are confident that a proper investigation will clear our lawyers of any wrongdoing.”
Universal Entertainment said that their attention was called in 2010 when the Office of the President changed the interpretation to the “grandfather rule,” which is used when foreign ownership of real estate properties or utilities is in doubt.
In determining if a company or an activity adheres to the “grandfather rule,” the citizenship of individuals who ultimately own or control the company’s shareholdings — whether via layered ownership structure or not — must be Filipino.
The “grandfather rule” was cited in several high-profile cases, including the stake of German airport operator Fraport in the Ninoy Aquino International Airport Terminal 3 (NAIA-3) project and the stakes of Hong Kong-headquartered First Pacific Ltd in telco giant Philippine Long Distance Telephone Co. (PLDT).
The DOJ had said then that the grandfather rule will be used when there is doubt on the extent of ownership or control of a firm involved in a nationalized activity. Previously, the “control test,” which involves a straightforward 60-40 computation of stakes was used.
Universal Entertainment said that, since 2012, they have been working with the Office of the Government Corporate Counsel (OGCC), which advised the Japanese firm that they have “until the completion of the development to resolve the land issue.” The Manila Bay Resorts project is set to be launch in 2015.
“Based on this recommendation we have since sought ways to find an amicable resolution to the problem. Currently, we are already in the final stages of negotiations to secure potential local partners and finding a conclusion to the ownership of land,” added the Japanese firm. – Rappler.com